Written by: Cally Worden
With the credit crunch continuing to bite nearly 8 years after it first hit, many loan sharks are cashing-in on the financial vulnerabilities of those most in need. The law states that anyone wishing to operate as a professional money-lender has to be authorised to do so by the FCA – the Financial Conduct Authority. Anyone operating outside of this law is known as a Loan Shark and their practices are illegal.
What is a Loan Shark?
Many loan sharks operate directly from home, often working door-to-door offering their services to householders. They generally charge extortionate rates of interest on the money they lend, they will often offer little or no paperwork laying out the details of your loan arrangements with them. In this way borrowers are vulnerable to exploitation and are afforded little protection by law.
If borrowers get into difficulties over repayments, loan sharks will often engage in further illegal practices in order to enforce the repayment ‘terms’ – this can include threatening behaviour, or the removal of valuables or credit cards from your possession or premises. In some extreme cases, it has been reported that loan sharks have forced defaulters into drug dealing and prostitution.
It is often those individuals who are most desperate who turn to loan sharks for help. Unfortunately, these borrowers are also the ones most likely to default on their loan, becoming subject to the unlawful practices under which loan sharks operate. It is a common misconception that by borrowing from a loan shark you have broken the law – this is not true. It is the loan shark who acts unlawfully, NOT his customers. It is very simple to check whether a lender is operating unlawfully or not – the FCA operates a register of all legal lenders. If the person offering to lend you money isn’t listed, they are a loan shark.
What you Can do if you Owe a Loan Shark Money
In England or Scotland you can confidentially report a money lender you think is operating without authorisation from the FCA by calling the Illegal Money Lending Hotline – 0300 555 2222, or contact them by email at: [email protected], or by texting ‘loan shark’ to 60003.
In Wales the Illegal Money Lending Unit offers a 24 hour confidential helpline on: 0300 123 3311, and borrowers in Northern Ireland can contact the Trading Standards Consumerline on: 0300 123 6262. All of these organisations will offer advice on your situation and will use the confidential information you provide to help stop illegal lending taking place.
If you are in debt, or need money urgently, there may be other options available to you without the need to turn to an illegal lender. The Citizen’s Advice Bureau can offer guidance and assistance on financial matters, the Money Advice Service is free and independent too. There are so many other possibilities to explore, so arm yourself with as much information as you can and try to resist lining the pockets of illegal lenders, who only have their own interests at heart.